Wednesday, October 20, 2010

Will Telecommuting Upend Housing Prices?

I was just watching "House Hunters" with my fiancee, and we saw an enormous, gorgeous house in east Bradenton, Fla., for $450,000. "That would get you a one-bedroom condo in D.C., if you're lucky," she commented.

Which got me to thinking: If full-time telecommuting became a substantial percentage of the workforce, it would probably result in plummeting real estate prices in places like D.C.--where many who aren't in love with the city itself move for jobs--and soaring prices in places like Florida and California--where many people would love to live but can't afford to do so because of a lack of local employment opportunities. It would also have an enormous effect on locality pay.

Not that I think mass telecommuting will happen anytime soon. Social capital, such as in-person training and rapport with co-workers, is likely more important than most people realize.


Adam Gurri said...

I agree that telecommuting would put upward pressure on prices far from cities and vice versa, but I don't think the net effect would be very significant.

There are a lot of benefits to living in a densely populated area. Doctors and hospitals get economies of scale, along with other services like that which are harder to provide the further you are from the provider.

Sure there are problems associated with population density as well--everything has trade-offs--but in general I think people will always be willing to pay a premium to live near a lot of other people.

If anything, the money saved on gas or train fare may be used towards moving into a more expensive area.